Real Estate Foreclosures and the Recession

In China, the National Finance and Development Laboratory has published a report about real estate foreclosures. The number of foreclosures will reach 1.6 million by 2021. The COVID-19 virus outbreak has made the country's economy even more shaky, and the Communist Party's zero-COVID policy has led to widespread layoffs and salary cuts. As a result, news about foreclosures has become a hot topic on social media.

It is important to note that purchasing a home during a recession can depreciate in monetary value. The price of homes tends to drop, which may mean that sellers will reduce their asking price or opt for a short sale. Recessions generally lower real estate values, as demand for homes drops. Therefore, you should make sure that you can afford the price before purchasing a home. In addition, you should check whether you can qualify for a better mortgage rate during this time.

The collapse of the subprime mortgage crisis left many Americans without a home. During this time, the mortgage rates nearly doubled, putting many borrowers in a financial bind. The fall in prices forced many of these borrowers to bring cash to the closing table, making it harder for them to sell. The downturn left most potential sellers shut out of the market. During the period, real estate foreclosures have been a major cause of the financial crisis.

While there are many negative effects of the recession, it can also be a boon for home buyers. Recessions cause prices of homes to decline, and buyers may find a bargain home easier to sell. Furthermore, when home prices are low, sellers may lower their listing prices to make a sale. Additionally, the Federal Reserve lowers the interest rate during a recession. These lower rates may save buyers substantial money on their mortgage.

The rate of foreclosures in these cities is higher than the national average. While many areas of the country experienced a foreclosure crisis, Detroit and Cleveland did not contribute to the national housing bubble. Instead, their local economies were weak and house prices did not increase much at the beginning of the decade. In addition, the number of foreclosures increased significantly in the state of Florida in 2009, and in some states, it was worse than the national average.

Foreclosures and the housing market are on the rise. According to ATTOM Data Solutions, foreclosure filings in February were up 11% from January. And, foreclosure starts were up 40% month-over-month. However, these numbers are artificially inflated due to the COVID-19 pandemic. Still, they are well below pre-pandemic levels. A study commissioned by the organization highlights the policy issues that need to be addressed in case of future waves of foreclosures.

The number of foreclosures is expected to be low, but it is not expected to be as severe as during the Great Recession. In April 2021, the overall delinquency rate in the United States was 4.7%. During the same period, 3.3% of mortgages were seriously delinquent. Meanwhile, 9.0% of California mortgaged homeowners are behind on their mortgage payments, according to the U.S. Census Bureau's Household Pulse Data collected from July 21-August 2, 2021. Further, the Mortgage Bankers Association reported that 3.4% of mortgages are in some sort of forbearance plan.